Pakistan: ‘At the End of the Road.’

By N. GUNASEKARAN

Mr. Abid Hasan, a former operations adviser at the World Bank and Pakistani newspaper columnist, said: “We’re at the end of the road.” He asked the Pakistan government to “make the political case to the public for meeting” the International Monetary Fund demands.

After Sri Lanka’s worst-ever economic crisis, ranging from shortage of foreign currency and inflation to deep recession, the ongoing serious crisis in Pakistan received worldwide attention. These two countries in Asia showed the world that the global capital-IMF nexus will definitely devastate the economies of poor countries.

Pakistan, with a series of energy challenges, faced a nationwide blackout on Jan. 23. More than 220 million population were left without power after the national grid failed, causing major disruption to mobile, internet and hospital services. Aging electricity transmission infrastructure, surging costs of fuel imports, hikes in energy prices under the dictates of IMF for funding and the squeeze on global energy supplies have been causing enormous hardships for the people.

People are living under severe difficulties due to soaring inflation and dwindling foreign currency reserves, rolling blackouts and fuel rationing. Pakistani authorities have to deal with immense challenges, such as unbridled inflation, rupee depreciation, trade deficit and a balance of payments crisis. The inflation rate increased by 15% since March 2022 reached 24.5% in December 2022. The country badly needed funds since its reserves dropped to $3.7 billion. But this was not enough to meet even one month of import cover.

Prime Minister Shehbaz Sharif was desperate to secure funds from the IMF. Pursuing destructive policies that deprive the livelihoods of millions of Pakistanis, the Shehbaz Sharif government is leading the country towards an economic collapse. The government announced a drastic hike of petrol and diesel prices, more burden for the already inflation-stricken citizens.

Pakistan currency, the rupee, reached a historic low, at 270 per dollar. The currency was allowed to be determined by the market; this decision was taken to fulfill one of the preconditions of the IMF to get the loan. This showed that the ruling elites, comprising Pakistani rich and powerful with the militarized state, have no sympathy for the people who are suffering from numerous hardships.

To convince the IMF that the government would implement all of its dictates, including tough measures like raising taxes and gas prices, the government hiked gasoline prices ahead of the arrival of the IMF team for a loan review. They were adopting such draconian policies as the obedient servants of international finance capital.

The very tough IMF conditions would always be demanding the governments do more privatization of public sectors, including public services, such as health, education, etc. And, while the poor countries were implementing the conditions, that would lead to a precarious situation where everything, including inflation, investment, GDP growth, etc. would be out of control. A grim and alarming scenario emerges in the concerned country. The country would lose its sovereign status. This is the typical trajectory of the third world economies.who were under the grip of the IMF. This is the exact scenario in Pakistan today.

The implementation of IMF and World Bank policies had a negative impact on people’s lives. Overall impact of the neoliberal policies on the common people of Pakistan was very much disastrous. Pakistan’s poverty rate was 39.2% in 2021-22, according to many international survey reports, including the World Bank. More than 86 million Pakistanis are suffering from acute poverty with 40% of the population living under food shortages, 80% living without access to clean drinking water, and 42% with no access to a proper sewerage system.

British colonialism in the 1940s established the politics of violence and looting of wealth. These evils are still present in Pakistani society. Various forms of terrorism are prevalent in the country. Decades-long policies spearheaded by the notorious “Washington Consensus” imposed on Pakistan through international financial institutions throughout the postcolonial period have now resulted in the virtual collapse of Pakistan’s debt-ridden economy. The debt servicing was eating up over 40% of its annual budget. Added to these woes, the terrorist activities are also increasing. Recently suicide bombing struck inside a mosque in Peshawar with death toll of 100 and 225 wounded.

Replacing the neoliberal paradigm, the alternative path based on redistribution of wealth and resources with focused concentration on to the requirements of Pakistan’s historically oppressed working population is the only way out from the current dilemma. For instance, if the government provides economic incentives to farmers and small and medium industrialists, that would encourage production of goods, resulting in an increase in employment and purchasing power of the people

With this alternative vision, working-class movements and the Left have to mobilize a wide cross-section of Pakistani toiling people. By this way, the seven-decades long grip of reactionary rightwing political forces could be weakened. Sixty-five percent of Pakistan’s 230 million people are below the age of 25, and a new alternative politics based on welfare of the working people will inspire Pakistan’s predominant youthful population.

N. Gunasekaran is a political activist and writer based in Chennai, India.

From The Progressive Populist, March 1, 2023

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